We may be able to help veterans of WWII, Korea, Vietnam and other wars qualify for funds that most people don’t know exist. The Veterans need not have participated in these wars but rather just needed to be on active duty within 90 days on either side of these declared wars.
The extra funds could mean the difference between depleting a life savings to pay medical bills and being able to use that savings for retirement or to pass it on to the next generation.
The Veterans Aid and Attendance Benefit can provide around $2,000 a month to pay for all types of medical care, including hospital and doctor care, and also home health assistance.
According to the latest data available from 2007, $3 billion has been allocated by Congress since the law went into effect in 1951 and only 150,000 veterans or spouses of veterans are currently claiming the benefit.
That is only 1% of the 15 million veterans who might qualify. Up to 85% of applicants get rejected on their first application because the process is complicated, but our office can find out if the Veterans qualify and, if so, help them get the funds.
Any veteran who served during the dates of a declared war–including WWII, Korea, Vietnam, Iraq and Afghanistan–is eligible if he or she is 65, received a discharge other than dishonorable, had 90 days of active duty with one day during wartime, and needs help with daily living activities because of health issues.
There are some other minor criteria due to the dates different wars were declared. If a veteran is disabled, the age limit can be lowered. There are income eligibility guidelines, too, but there are techniques, such as setting up an irrevocable trust, that can protect assets while still qualifying for the Veterans Aid and Attendance Benefit.
Monthly benefits range from $2,540 for two married veterans, $1,949 for a veteran with a dependent spouse, $1,644 for a single and $1,056 for a surviving spouse.
Using the available veterans’ benefits can pay for medical expenses or for an assisted living facility and protect the family’s nest egg at the same time, he says.
The Veterans Aid and Attendance Benefit is completely separate from Medicaid. Applications are separate and can be made for either or both, but the two should not be confused.
The Veterans Benefit is described in four pages of a 1,800-page law, so it is not surprising many Veterans do not know about it.
Long-term care planning has always been a dilemma in my mind. You can look at statistical averages all day long, but in the end it comes down to each person’s individual experience. You’ll either need it or you won’t, and if you do need it you’ll either pay a lot or a little. So the “planning” can range from needing many years of care at a very high cost, to needing no care at all at a cost of zero. It’s equivalent to the possibility of your house burning down. Your house will either burn down, or it won’t. Chances are it won’t. But if it does, it would be devastating financially. So you plan for this possibility by buying fire insurance.
But that’s where the equivalence ends. Fire insurance is affordable, so there is little downside to protecting against an event that probably won’t happen. (In case you’re interested, there is a one in four chance that your house will have a fire large enough to report it to the fire department, according to the National Fire Protection Association.)
Long-term care is a little different. According to a recent Vanguard Mercer study on health care costs, about half of the elderly can expect to pay nothing for long-term care. Another quarter can expect to incur costs of less than $100,000. Fifteen percent can expect costs exceeding one-quarter of a million dollars.
Unlike fire insurance, long-term care insurance is expensive and difficult to obtain. Some people can’t qualify for it. Some people can’t afford it. And some people buy it with the best of intentions only to face premium hikes that render it unaffordable after many years of paying on it. While there will always be a certain number of people for whom long-term care insurance is appropriate, there has to be a better way of planning for long-term care.
One way is to refrain from lumping everyone into one big risk pool (like the insurance companies do; that’s their business). Instead, use a more targeted method of estimating the chances of needing long-term care and the costs of such care. Consider the likelihood of needing long-term care in the first place. Look at the type of care that might be needed, and the duration of such care. Then consider the costs of each type of care. While these factors may not be fully predictable, we encourage you to consider them in the context of your own health outlook and life expectancy and family dynamics that can lead to a closer approximation of long-term care costs.
The official definition of long-term care, according to the Health Insurance Portability and Accountability Act (HIPAA), is the need for help with two activities of daily living (ADLs) for a period of 90 days or longer. The ADLs are bathing, dressing, toileting, transferring (getting in and out of a chair or bed), continence, and eating. The definition also includes the need for substantial supervision for safety reasons due to severe cognitive impairment.
Long-term care can be further categorized as temporary or ongoing. Temporary care might include rehabilitation after a hospital stay or recovery from an injury or surgery. In these instances the individual recovers and no longer requires care. Another example is hospice care where the end of life is imminent. Temporary long-term care costs may be covered by Medicare.
In contrast, ongoing long-term care is many months or even years in duration. It may be triggered by cognitive decline, permanent disability, and other chronic conditions. The most common situation leading to ongoing long-term care is dementia. Stroke, Parkinson’s disease, and osteoarthritis are also common reasons for needing long-term care. Once this type of care is started, it usually continues for the rest of a person’s life.
But HIPAA’s definition of long-term care is not the only type of care that needs to be planned for. Long before a person becomes unable to perform two activities of daily living, they may need help with cleaning, cooking, shopping, and getting around town. These homemaker services are not considered formal long-term care (and are not covered by insurance), but their costs should be incorporated into the financial plan to the extent that there is no family member available or willing to help out.
If you remain at home into your 80s and 90s you will need to budget for these services in addition to your regular costs for housing, food, and transportation. The chart below shows an average annual cost of $45,756 ($3,813 per month) for homemaker services. But the actual cost for any one individual will depend on their needs. A person who hires someone to come in for just a few hours a week will spend far less than this. According to Genworth, the national median hourly rate for homemaker services is $21. If the need is 20 hours a week, the monthly cost would be less than $1,800. With all the meal and grocery delivery services cropping up today, the cost can be even less.
The next step, for those who are unable or unwilling to stay in their own homes but who are still relatively healthy, may be a move to an assisted living facility. The chart below shows an average annual cost of $43,656, or $3,638 per month, for assisted living. But this would include housing, food, some transportation, and housekeeping services in the monthly fee, so it may not be as expensive as it first seems.
A person who wishes to stay in their own home and who needs more extensive care than simple housekeeping may hire a home health aide. These aides offer “hands-on” personal care, but not medical care. The chart above shows this cost to be $46,332 per year ($3,861 per month), but again, it depends on a person’s needs. The national median hourly rate for a home health aide is $22. If the aide only needs to come in for a few hours a day or week, the cost would be far less.
The last step would be admittance to a skilled nursing home at a median cost of as much as $267 per day for a private room. Now we’re talking some real money: nearly $100,000 per year. In planning, you need to ask yourself: what are the chances I will need this type of care, and for how long? The answer will determine the type of planning you need to do. Some may want to set the funds aside or buy some type of insurance, while others may want to take their chances that they will never need this extreme type of care.
The other thing to remember is that if a client does encounter cognitive or physical decline, whether they stay in their own home or move to some type of assisted living facility, spending in other areas, such as travel and leisure, will decline.
And don’t forget about family members, who may or may not serve as a resource. If you have good relationships with your children you may be able to depend on them for housing and some type of assistance. Those who don’t have children, or who don’t want to burden their children, will want to make sure the financial resources are in place so they can pay for the housing and care they need.
In the end, planning for long-term care should be like any other aspect of financial planning—completely customized for based on preferences, probabilities, and projected costs for the type and duration of care that might be needed. Some will want to insure to the hilt. Others would rather take their chances and hope for the best. Whenever we’re working with uncertainties like this, I believe that falling back on general statistics is the wrong approach. Like life expectancy and other matters that can’t be predicted with certainty but that might have a sense about based on their own health experience, genes, and lifestyle, I think the best way to do long-term care planning is to engage with your planner. Lay out the probabilities, costs, circumstances that might point to a need for long-term care (dementia, etc.), and possible solutions (self-insure, LTC insurance, hybrid policy, Medicaid). Once you are informed and have had a chance to think about it, you may be able to come up with a workable plan.
Please give us a call at 215-886-2122 to start the conversation.
|Who Will Need Long-Term Care?
It is difficult to predict how much or what type of long-term care a person might need. Several things increase the risk of needing long-term care.
· Age. The risk generally increases as people get older.
· Gender. Women are at higher risk than men, primarily because they often live longer.
· Marital status. Single people are more likely than married people to need care from a paid provider.
· Lifestyle. Poor diet and exercise habits can increase a person’s risk.
· Health and family history. These factors also affect risk.
Source: National Institute on Aging
“Many people view Medicare as the gold standard of United States health coverage, and any attempt to cut it incurs the wrath of older Americans, a politically powerful group. But there are substantial coverage gaps in traditional Medicare. One of them is care for your teeth. Almost one in five adults of Medicare eligibility age (65 years old and older) have untreated cavities. The same proportion have lost all their teeth. Half of Medicare beneficiaries have some periodontal disease, or infection of structures around teeth, including the gums. Bacteria from such infections can circulate elsewhere in the body, contributing to other health problems such as heart disease and strokes. And yet traditional Medicare does not cover routine dental care, like checkups, cleanings, fillings, dentures and tooth extraction… Adding a dental benefit to Medicare is popular. A Families USA survey of likely voters found that the vast majority (86 percent) of likely voters support doing so. The survey also found that when people do not see a dentist, the top reason is cost. Ms. Willink’s study estimated that a Medicare dental benefit that covered three-quarters of the cost of care would increase Medicare premiums by $7 per month, or about 5 percent. The rest would need to be financed by taxes.” (New York Times)
The Medicare Rights Center is a national, nonprofit consumer service organization that works to ensure access to affordable health care for older adults and people with disabilities through counseling and advocacy, educational programs and public policy initiatives.
Every year it fields thousands of calls from people having problems with their Medicare. In its latest report summarizing calls from 2016, it grouped problems into three areas: 1) Medicare Part B enrollment rules and pitfalls; 2) difficulties with Medicare Advantage (MA) health service denials and coverage rules; and 3) financial hardship affording Medicare Part D cost-sharing.
Here’s a typical case: “Ms. B was covered by COBRA and undergoing cancer treatment. She declined to enroll in Medicare Part B because her employer incorrectly told her COBRA would pay as a primary health insurance payer after she went out on disability. While receiving expensive life-sustaining cancer treatment, the COBRA plan stopped paying primary and recouped a year of payments. Ms. B was left without health insurance, charged for thousands of dollars in medical bills, and threatened by providers to cut off her cancer treatment because she lacked insurance coverage for outpatient services.”
The report points out something we’ve been seeing for years, and which inspired our creation of the Savvy Medicare Planning program in the first place: knowing when to enroll in Medicare falls on the beneficiary without proper notification from the Social Security Administration or Medicare. And many employers’ benefits departments lack the Medicare knowledge to guide their employees and retirees on Medicare enrollment. “Whether due to the misinformation provided by employers or lack of access to reliable information about Medicare enrollment, enrolling in Medicare Part B at the right time after employer coverage ends is a challenge that many people can get wrong. Contributing to the problem is the lack of a formal notice about enrolling in Part B or how to use the Part B Special Enrollment Period (SEP), as well as a misunderstanding of Medicare’s coordination of benefits rules when people have other types of health insurance coverage,” the report says.
One area many people get wrong is the special enrollment period that allows people age 65 or older to defer enrolling in Medicare Part B if they have employer coverage. The coverage must be based on current employment of self or spouse; it can’t be a retiree plan. Medicare pays primary to retiree plans—but only if a person is enrolled in Medicare. Medicare also pays primary to COBRA—but again, only if you are enrolled in Medicare. “People with retiree coverage or COBRA who fail to enroll in Medicare will end up without a primary health insurance payer. In some cases, people may slip through and go unnoticed while the secondary health insurance erroneously continues to pay primary. Some beneficiaries explain that they are informed of this employer error only after they have incurred high medical costs. When this happens, Medicare-eligible beneficiaries run the risk of the insurer recouping all payments made to providers.”
The bipartisan BENES Act would improve Medicare notification procedures and fix the coverage gaps in the 5th, 6th, and 7th months of the initial enrollment period and in the January 1 to March 31 general enrollment period, which now makes new enrollees wait until July for coverage to start.
Another area of concern are Medicare Advantage coverage denials. These comprised about 40% of the 16,758 calls to the Medicare Rights helpline. In one case a woman experiencing gastrointestinal bleeding went to the emergency room of an in-network hospital where she was treated by an out-of-network doctor. The plan refused to pay for the doctor’s services because he was not in the network. This was not an isolated case. There were many complaints from Medicare Advantage enrollees who were careful to use in-network facilities where, unbeknownst to them, they were treated by out-of-network doctors.
Medicare Advantage enrollees also have trouble accessing needed care in their plan’s network because the pool of network specialists is limited and may result in long waiting periods for appointments. One person near Portland, Oregon, for example, had to wait up to four months to get an appointment with a dermatologist in her plan’s network to remove cancerous skin tissue. Medicare Advantage plans all have an appeals process, but navigating it is a stressful and onerous task.
About 20% of calls expressed concern about Medicare affordability. Of those, 53% were related to Part B premiums and 43% were related to Part D drug costs. And these calls were not just from low-income people; 44% of callers did not qualify for Extra Help due to the program’s low asset and income limits. One beneficiary who was scheduled to undergo a kidney transplant needed to take a specialty antiviral medication for six months after the transplant at a cost of $2,500 per month. He did not qualify for Extra Help and could not appeal. Medicare Rights is working to improve the affordability of prescription drugs for people on Medicare, including allowing “tiering exceptions” for drugs on a Part D plan’s specialty tier.
The report supports our mission to educate financial advisors on Medicare enrollment rules in order to save their clients some of these headaches. In addition to helping clients enroll in Medicare on time, we encourage you to be aware of Medicare Advantage pitfalls, particularly with regard to the narrowing of provider networks and lack of communication when an out-of-network doctor steps in to treat a patient at an in-network facility. If clients lack access to a good, robust Medicare Advantage plan with an extensive provider network, you might steer them toward Original Medicare with a comprehensive Medigap plan (F or G). For those who insist upon enrolling in a Medicare Advantage plan, alert them to some of these network pitfalls and advise them to confirm that they are being treated by an in-network doctor at the time of treatment (assuming they are conscious and not bleeding).